Arrium gets fresh capital from GSO, but Whyalla steelworks not guaranteed safe

Arrium has been thrown a lifeline, though some believe the loss-making Whyalla steelworks is still in danger of being shut down.

Last week Arrium announced that it had started researching the effects of putting Whyalla into care and maintenance, and that an additional $60 million needed to be saved from the site’s operations. Arrium has $2.3 billion of debts, including to Australia's four main banks.

The ABC and others report that Arrium has reached a $1.3 billion agreement over six years with GSO. In return, GSO gets share warrants for 15 per cent of the company and two seats on its board.

Analyst Toby Grimm said it was a plus in the short-term, but GSO’s goal was to make money for its shareholders rather than to save the Whyalla steelworks.

"Ultimately if they run the financial numbers and figure out that they will be financially be better off with it [the steelworks] closed than with it open, then that's more than likely a decision they'll ultimately take,” he told the ABC.

"Frankly I think that's a decision any investor would take."